Many people start thinking of financial planning as they approach their 30s. Some married couples, especially those with children, may get serious about financial fitness earlier. It’s never too soon for anyone to start saving for the future – or at least begin to ask questions about getting ahead. Here are a few financial questions many beginners ask:
- Do I really need to start saving for retirement this early? As each new crop of grads foray into their first full-time jobs, their orientation to work often includes presentations on planning for retirement. To people in their 20s or 30s, talk of retirement seems miles away, so some of them block out those employer-sponsored sessions and scroll on their iPhones instead. What they don’t realize is that their best chance of hitting life’s financial lotto starts in youth. Compound interest adds up to astounding amounts of money over many years, not as much for those who wait until their 50s or later. Retirement savings accounts can come in handy along the way, too, for first home purchases, further education, health care costs, other expenses.
- How do I save anything when I can barely cover my bills on a beginning salary? Young adults earning beginners’ pay at their first jobs often find it hard to cover all the costs of living, yet alone set aside anything for the future. Even at minimum wage, though, anyone can:
- Make savings a habit. Investing only one or two percent of each pay check adds up over time.
- Small-income savers can get ahead simply by saving change from their pockets or purses to invest.
- Where can I earn better returns than in standard savings accounts? Often folks earn very little interest by leaving money in savings accounts, while they could do better in other ways:
- Certificates of Deposit (CDs), where you leave cash for varying periods of time (e.g., six months, one year, five years, etc.) pay higher rates of interest, depending on how long you leave your money in them.
- Bonds issued by governments or corporations usually pay higher rates of return than savings or CDs.
- Mutual funds (made up of many different chunks of companies in the stock market) often do even better.
- Stock in individual corporations involve more risk, but can reap the most earnings – if the companies selected for investment grow and make good profits.
- In many real estate markets, property doubles or triples in value through the years. Property owners, though, need to put effort, along with money, into their real estate for upkeep. Most other investments, including those above, rely on someone else’s tender care while savers can idly watch their money grow.
- How can I be sure I won’t lose money when investing? Nothing in life is a sure thing, but you can increase your odds of financial success by making wise investment choices. Study all your options carefully and find a financial advisor to inform you on issues that affect earnings.
Manage Your Money . . . financial facts for a brighter future provided by Advancd Asset Management LLC
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